By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee slipped on Wednesday, pressured by a firmer dollar and higher U.S. Treasury yields after the Federal Reserve’s widely expected 25 basis points cut left investors parsing mixed signals from its projections and commentary.
The rupee was down 0.3% at 88.0650 against the U.S. dollar, in line with weakness among regional peers and halting a four day streak of gains.
The dollar was up 0.2% at 97.2 against a basket of major currencies even though it had hit a 3-1/2-year low in the immediate aftermath of the Fed’s policy announcement.
The U.S. central bank expectedly cut interest rates by 25 basis points on Wednesday but Fed Chair Powell characterised action as a risk-management cut which splintered from the dovish tilt expressed in policymakers’ dot-plot interest rate projections.
While analysts at ANZ characterised the Fed Chair’s press conference remarks “as balanced and restrained, and not at all dovish,” their counterparts at Goldman Sachs noted that ” many hints at today’s meeting pointed to today’s cut being the first of a series of consecutive cuts.”
For the rupee, the differing interpretations sparked a slip below the 88/USD mark, a day after the local currency touched its strongest level since late-August.
Traders pointed to broad-based dollar buying interest from both local and foreign banks which exerted pressure on the rupee on Wednesday.
India’s benchmark equity indexes, the BSE Sensex and Nifty 50 were upp about 0.4% each while the yield on the benchmark 10-year bond ticked up 3 bps to 6.50%.
Elsewhere, the Bank of England is expected to keep policy rates unchanged on Thursday and the decision precedes a no change in benchmark rates expected from the Bank of Japan on Friday.
(Reporting by Jaspreet Kalra; Editing by Nivedita Bhattacharjee)
